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Big Liabilities For Uber, Sidecar And Lyft?

Are you sick of waiting for a taxi or limo? If you have a smartphone, you may be able to summon a car in minutes via Uber, Sidecar or Lyft. Lyft has the added visual bonus of a furry pink mustache on the front grille. Uber may be a little more Wall Street, but all of them aren’t really limos or even taxis, right?

They are tech companies, they claim, and just take a fee for putting passengers and drivers together. Clearly, these drivers aren’t employees of the car services–er tech companies–at least on paper. Besides, neither the companies nor the drivers are likely to even think there is an employment or agency relationship viz. third parties.

Yet even some drivers themselves may not be entirely complacent. Some Uber drivers have sued claiming the company takes too large a cut of tips. But the biggest legal exposure by a wide margin is accident liability. What if a driver has an accident that injures the passenger or a third party, say a child in a crosswalk?

Plainly, the first–and perhaps only–recourse is the drivers. They have their own insurance, but a serious or fatal accident can involve millions of dollars of damages, far exceeding most driver insurance policies. And some accidents will occur despite screening efforts by the companies. When accidents happen, the companies–however you choose to view them–are clear targets.

The liability could be direct–arguing the company didn’t adequately screen drivers–or vicarious. The latter is the most explosive, a type of agency liability that makes a company liable for the acts of employees. In one lawsuit, Uber is being sued along with the driver, Djamol Gafurov. Mr. Gafurov’s insurance policy has a $750,000 limit. In that sense, adding Uber as a defendant was probably a no-brainer.

Even worse, New Year’s Eve, a six year old girl was killed in a San Francisco crosswalk by Uber driver Syed Muzzafar. Several in the girl’s family were also injured. The driver’s status with Uber was terminated, but the incident will likely prompt more questions about driver training and compliance for app-based car services. Ultimately, the question is whether companies will be found liable.

Some say the Communications Decency Act prevents liability, arguing that these tech companies are just information content providers. But it is not far-fetched to imagine verdicts for injured plaintiffs, no matter how the legal niceties are observed. A close parallel can be found in suits involving independent contractors like many taxi and delivery drivers.

If a taxi injuries someone, despite the “taxi leased to driver” on the door, the plaintiff is likely to sue the driver andthe cab company. Arguing that the independent contractor arrangement is a sham, the plaintiff may prevail. The same happens with newspaper carriers and all manner of delivery personnel. Even pizza delivery.

Domino’s Pizza faces a $32M Verdict over a pizza delivery accident that killed a 65 year-old woman and left her 70 year-old husband with permanent brain injuries. The driver was liable, as was the independent franchise store that sold the pizza. And Domino’s was liable too, in part because the driver was speeding to meet Domino’s 30-minute delivery policy.

Although Domino’s is appealing, worker status and agency questions won’t end here. Uber, Lyft and Sidecar may be in their infancy, and there are various legal bases upon which they can rely for protection. But the law has been sorting out similar issues for decades. The contracts and the actual course of conduct of the parties are likely to count.

Independent contractor v. employee characterization questions span medical malpractice cases, tax disputes, worker compensation and unemployment matters and more. Even employment discrimination and sexual harassment cases. As many tax, employment, insurance and labor disputes reveal, workers labeled as independent contractors may be employees. Arrangements can be genuine or can be independent in name only, with no chance of standing up against the IRS, other agencies or the courts.

If an injured party shows that the driver was really an employee, the employer is also on the hook. There are many taxicab, limo and package delivery cases that raise this issue. In franchise operations, the relationship can be even more attenuated. The facts and circumstances matter, and not all cases come out the same way. In Viado v. Domino’s Pizza, LLC, the court said a franchisor like Domino’s can be responsible for the conduct of a franchisee’s employee in some cases.

Usually, an agency requires a principal and agent like an employer and employee. As with franchises, services like Uber, Sidecar and Lyft may test the legal limits of liability. Among other factors, many worker status cases look primarily at:

The employer’s control over the worker;

The worker’s opportunity for profit or loss;

The worker’s investment in facilities;

The worker’s skill set; and

The duration of the relationship.

It is too soon to say how the Uber, Sidecar and Lyft liabilities will be sorted out, and the answer seems unlikely to be a bright line. But the more time that elapses, the more accidents there will be. That means more chances for legal wrangling over how old laws and models apply to the modern age.

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

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We set up a fund to support Sophia Liu’s family and help to pay for the funeral and medical costs from the New Year’s Eve collision. http://www.youcaring.com/memorial-fundraiser/sofia-liu-memorial/122617

This is a big turn around for Forbes who has been nothing but a cheerleader for Uber, Lyft and Sidecar until this poor 6 year old girl was hit and killed by an Uber driver with no insurance. In San Francisco, the streets have been flooded with around 5000 cars from these companies all competing for fares along with 1,800 authorized, fully insured and yearly safety inspected taxi’s who carry $1,000,000 coverage whether they are carrying a fare or not.

The streets have become like the wild west and nothing like the tech utopian dream of shared transportation promoted by Mayor Lee and his deep pocketed Silicon Valley financial supporters. Mayor Lee’s own daughter landed a job with Lyft in corporate.

Lyft drivers are already assaulting innocent pedestrians like this poor person for daring to take a pic of his Lyft car blocking a cross walk, disabled ramp and fire hydrant. Not quite the warm and fuzzy ride sharing company image they portray in their ads. It’s only going to get worse as more get hurt or killed by these companies than have no insurance. https://www.youtube.com/watch?v=jnJ_UtBjJRA

The comments negative to Lyft (above) are written by taxi drivers or reps of the taxi industry. They are not true. Are there not fact checkers at Forbes anymore?

Both Lyft and Uber carry $1 million in insurance that covers passengers, and third parties like pedestrians and other drivers. Is that enough? I don’t think so. But you cannot say they are uninsured. That’s just not accurate. Also, the Uber driver who killed the little girl was absolutely licensed and carrying insurance at the time. So that statement in the comments isn’t true.

The legal question is, was he logged in to the system? Was he on his way to a pick up? Did he have a paying passenger in his car? It appears that he was not. Had he been driving a passenger or on his way to a passenger at the time, he most definitely would be insured.

The idea that taxi drivers are safer or better insured is not borne out by statistics. The rideshare thing is early in its infancy, but I’ve read stats that their safety record is better. Taxi drivers kill and maim pedestrians and passengers all the time! Just google it.

Anybody who has taken a taxi vs taking a Lyft or Uber will tell you, the taxi drivers are worse drivers, not nice, not clean, not fun, not safe. Lyft and Uber is a much better experience all around. I took taxis for years, and I always take Lyft now. It’s not even close.

And ask anybody who has ever had a wreck with a taxi company, how that insurance claim went? It’s usually a nightmare.

So let’s focus on making the rideshare companies insure their drivers and the public better. Sure, that’s fair. But the other statements in the article and comment sure need to be fact checked.

You’re the one that should get your facts straight. Uber, Lyft and Sidecar carry insurance policies that they will not allow anyone to see. Nobody has seen these. So when it comes down to it, their 1mil insurance policy probably contains legal jargon that leaves them free from liability. Do you really think insurance companies are going to protect all the goofs out there on the road driving their own cars for business (Uber, Lyft, Sidecar)? I beg you to contact a couple insurance companies and find out (do some fact checking yourself).

All of these people that have signed up to be UberX, Lyft and Sidecar drivers are now competing with each other to get to a spot that is dense with people pressing their apps in order to get a ride. Imagine a fish bowl when you drop the food, all the fish swarm to the do to get the food. No insurance company is going to cover these people because they do not have the proper training, background checks, etc. THAT IS A FACT. Look up Uber assaults on the internet and you’ll see that there was an UberX driver that assaulted a man and he had a criminal history, felony, prison time…and then he became an UberX driver and assaulted a passenger. Uber obviously has a great background check in place. You should feel really safe.

Another fact for you. The Uber driver that struck the family and killed the six year old girl had stated that he was looking for his next fare. Uber claimed no responsibility, offered no apology. Their only statement was “we’ve deactivated that driver and we’re not liable for the death of the six year old”. No empathy or sympathy for the family. NOTHING. Because they do not care about the public or the safety of the public, they care about money and that’s it.

YOU should check your facts because YOU have no idea what you’re talking about. Don’t comment on things when you haven’t even read up on. You’re asking questions in your comment that have already been answered.

The difference when a taxi driver kills and maims someone is that the Taxi company has to cover that with their legitimate insurance. As with dealing with any insurance company, it’s going to be a headache. Insurance companies are a scam and they’ll fight tooth and nail to avoid paying for anything. Again, the difference is that the Taxi companies insurance policies aren’t hidden and will ultimately pay up.

Stop calling these ride shares, they’re taxis. They’re taking people somewhere for a fee. That’s a taxi. If I got in a car and gave someone a sandwich because I had two, that would would be sharing. If I have to give them money…am I just sharing money? Come on, get real.

You really shouldn’t be commenting on this, you haven’t a clue what you’re talking about.

And before you try to say that I’m a part of the taxi industry or a taxi driver, I am not. I am someone that can see through the hype of these companies and their slimey ways. I run a small independent record label and have no interest other than I would prefer to take a taxi over these companies because I see what the end game is and what’s to come. These companies will kill off the taxi industry. How? They have the lowest fares and can afford to keep lowering them until taxis are non-existent because they can not compete due to the fees, taxes and everything else they have to pay for. Public transit will fall as well because ridership will be down for those industries as well since you’ll be able to take a UberX for less than the bus. Then the only options will be these companies that will jack up their prices and we’ll all foot the bill then, we won’t be given a choice. Right now, we have a choice and I like having a choice.

Regulate these companies now. That’s what is needed, not a free for all to do as they please without any consequences.

No, the legal question is whether the UberX car was insured. It wasn’t because the driver’s vehicle was just carrying a non-commercial policy which excludes coverage for a taxi business. Uber checks the insurance policies of vehicles that it accepts into its system and knew that this automobile was uninsured when it was not occupied by a passenger. This is gross negligence and Uber will end up paying for the accident.

Who knows whether the driver was logged in or had accepted a fare when he had the accident. Uber controls the records and has a strong motivation to alter the data to avoid the liability. No court is going to accept these records as determinative.

Uber is the one who came with this absurd scheme of switching between the driver’s private policy and their company insurance depending on what button on the smart phone app the driver has pushed. It is unworkable and is based on insurance fraud.

The regulators like the California Public Utilities Commission have to start doing their job and mandate that UberX vehicles carry commercial insurance just like a taxi. Up to now they have caved in to the “ride share” companies well funded astro-turf campaign. It looks like the old saw that “it will take a death to get something done about this” has been reconfirmed.

Are people finally realizing what a disaster these services really are in regards to corruption, safety, and accountability? Is the hype finally coming to an end? These are multi million dollar corporations who have only been able to make substantial revenue by avoiding regulation, and any financial burdens that come along with regulation. They simply do not deserve a chance at competition. In their short life span, there have already been numerous assaults, accidents and deaths. On the drivers side, they are partially keeping and controlling drivers tips, and without warning, slashing drivers income. They promise the drivers that the reduced fares will increase volume. A complete lie. One driver can only get in so many fares during peak times, resulting in a loss of wages. During slow periods, there is simply not enough fares for the over saturation of vehicles added to the road. It’s the drivers that have to carry the overhead leaving the profit margins huge for these services. Simply put, they’re here to crush any local innovation, and they want to be the only player in the game. When that happens, we already see how erratic the rates are. One moment you’re paying slightly more than bus fare, on the way back, you’re literally paying the same price as a plane ticket from Seattle, to San Fran. City councils need to work on rejuvenating the local taxi / livery model. The cars already on the road that are legally licensed and insured.

As an insurance professional in this business, I’m certain Uber, Lyft & Sidecar will be liable in most of these accidents.

Expedia & Orbitz are Tech companies matching people to airlines….BUT, if they matched you with an airline that was not licensed or did not have the proper “required” insurance, they will be held liable.

If you showed up in an empty field with a broken down unlicensed plane, unlicensed pilot (& Uninsured) and there is an accident, Expedia & Orbitz would be on the hook.

Unlike Expedia & Orbitz, UberX only matches customers to the drivers in its fleet. It determines the fare with a GPS meter. Uber then skims off 20% of its driver’s fare instead of the fixed fee charged by the airline matching flights. Uber checks the driver’s motor vehicle record, license and criminal history. It inspects the vehicle and checks the insurance. Uber’s relationship with its drivers is not arms length.

Although Uber’s drivers are nominally independent contractors, Uber does not require that they show their business licenses. In states that require that for hire drivers carry industrial insurance, Uber does not demand proof of coverage. Most of these drivers don’t know that they have no on-the-job injury coverage until they are hurt.

Although Uber’s insurance check revealed that the coverage on this vehicle was non-commercial, Uber accepted this auto into its network even though that they knew that the private automobile policy would be invalid due to the business activity exclusion. This is gross negligence on Uber’s part and they will end up paying for this accident.

You may be right about some or even all of this. But keep in mind that the legal landscape for services of this sort is only just developing. I don’t think the answers are likely to be clear for some time. In the meantime, whichever side of this debate you are on, people will need to be aware there are uncertainties. Meantime, I would expect that the ride share companies will also take steps to bolster their liability protections, regardless of whether they ultimately think they will be held liable.

Uber will figure it out how to be notified for insurance cancelation or loss of driver’s license.

But, do we know how many people die in car accidents? How do their families get their millions?

But if Uber is making a lot of money american socialism wants to get in. Via workman’s compensation, unemployment and lawsuits.

Freedom of Speech vs. Freedom of Enterprise. Freedom of Speech allows the people to talk and talk and talk. Freedom of Enterprise moves the society forward for the people. If enterprise does not see profit there is No Capitalism.

” That means more chances for legal wrangling over how old laws and models apply to the modern age.”

Let’s say I start a service that uses old technology. I create a service where I solicit ‘independent’ drivers and run a criminal and DMV background check. Instead of a smartphone app, customers would call an 800 number for a lift, give their credit card #, and then I have an operator connect to a potential driver who is clocked in. How is Uber or Lyft any difference from a taxi service agency that I described?

Just because you use a web based app to connect customers and drivers doesn’t excuse the company as an employer, or make it different from a taxi. Sounds fishy to me as they are skirting on the legality of “ independent contractor” and “employer”.

The regular insurance companies have noticed that UBER is trying to transfer it’s liabillty to them. Companies like State Farm, ALL State, Geico and Farmers have started the process of identifying these drivers and cancelling their policies on the spot. Soon there will be insurance inspectors representing these companies roaming the streets of San Francisco and New York, looking to identify these drivers and document their findings(iphone). By the way there is no doubt that there has been many instances that a driver for UBER has been in an accident and has falsified a claim to their own insurance company. They do this to avoid problems with Uber and LYFT. In the city of San Francisco, young girls who want to be waited on, call these services and have them double park on busy streets until princess shows up. The cost to society: Higher insurance rates because you are now in the same pool as Uber/LYFT, Incredible traffic and congestion ( who doesn’t love that), and now your life may hang in the balance if you are crossing the streets and you do not even know who will pay for your medical costs and suffering as UBER/LYFT fights over paying you with State Farm and Geico. Once the government who is not being a conspirator ( mayor Lee) and PUC realizes that once UBER/LYFT have to have the formal insurance ,other inspections and business taxes that these business models are dead. It is only through piracy and cutting corners that they are able to take people around with UBERX/LYFT. If they had to comply by the same rules, they are out of business overnight. Meanwhile the public for the most part loses when some people feel like they are too good to raise their hand up on a road for a legitimate ride. How will the rest of us deal with breaches in to our personal finances such as hiked insurance premiums and sitting through incredible gridlock. If you are using these services to save a couple of bucks, hope it does not hurt any of your limbs eventually. Too high of a price to pay. The biggest surprise to me is the EPA. Whenever the Cities are trying to issue new Taxis, there are months of environmental impact studies done before anything can be done and yet on the weekends in San Francisco you have at least 500 to 1000 extra cars on top of Taxis that roam the road. Is it me or does it seem that many government agencies are completely sleep at the wheel when so many things are wrong with this business model. I have no proof, but smells like a stink is on in the city of San Francisco.

People who drive their cars commercially, courier drivers for example, are required by law to carry commercial insurance, usually around 500 dollars per month compared to the seventy or so per month as a private car. None of the courier companies demand the drivers show commercial insurance to them, not telling them they are not insured if they have an accident witout commercial insurance. This puts the drivers between a rock and a hard place and they usually will drive without the high insurance rates. Police know it too but don’t actively enforce these regulations at the courier companies and just stick it to the driver when caught. Courier companies should be forced to guarantee commercial insurance and since they don’t, they reap the ‘benefit’ of being able to pay below minimum wages while the drivers suffer the consequences of robbing Peter to pay Paul.

Uber what a scam. Nothing more than black market cabs with a middle man. Uber has no intention of paying out after an accident. They are a registered company in holland with a loosely owned subsidiary registered in Switzerland that owns the insurance that uber claims to cover accidents which was purchased by a insurance company out of the Bahamas. The insurance only pays out it the subsidiary is responsible not Uber or the driver. Good look proving that and good luck suing in 4 different jurisdictions and getting anyone to pay up. So if u get in a car accident while in a uberx car pray to God that your drivers is not at fault. This is not innovation it’s a scam.

Now that an Uber Partner (me) @ArrestingUber has mounted a campaign against Uber will investor confidence be shaken…? www.arrestinguber.com is starting to touch a nerve – by performing citizens arrests Uber is being forced to reconsider and most likely withdraw the X offering from Australia. ArrestingUber commits to then going overseas to the UK and US and with thousands of drivers joining in the first few days alone… one might expect to see this may be Uber’s biggest challenge to date… StartUpDaily (Australian online version) published an excellent balanced article, probably the best outside of the Forbes articles that really gives a balanced view from an otherwise Uber-convert Tech journalist.